BRAD GILMOUR
OTTAWA – Lengthy delays and regulatory uncertainty is deterring investment in major infrastructure projects in Canada, according to a new report from the C.D. Howe Institute. In “Smoothing the Path: How Canada Can Make Faster Major Project Decisions”, authors Charles DeLand and Brad Gilmour find that Canada’s regulatory approval process is creating high costs for investors and preventing critical projects in hydrocarbon production, mining, electricity generation, electricity transmission, ports and other infrastructure from being built.
Sectors that have historically driven business investment and productivity in Canada—mining, oil and gas—are most affected by complex regulatory procedures. While investments in these sectors have supported high incomes for workers and high revenues for government in the past, they are now trending downwards. “Canada is struggling to complete large infrastructure projects in a reasonable time frame and at a reasonable price and the proposed amendments to the Impact Assessment Act (IAA) are insufficient,” says Gilmour.
Amid this general trend of falling resource investment, Canada is also trailing in its relative share of mining investment globally. “Energy and mining project spending remains far below its 2015 peak and this overall decline is worrisome,” says DeLand. “If Canada is to capture a greater share of rising global mining investment, including opportunities for mining critical minerals, it needs to do more.”
As is, the proposed IAA amendments almost certainly prefigure further litigation and investment uncertainty. For example, key jurisdiction questions have not been resolved, with undefined terms like “non-negligible effects” to determine it. In addition, the IAA’s breadth remains much wider than previous legislation. It should be explicitly tied to projects listed as under valid federal decision-making authority. The IAA’s role is not meant to invoke broad public interest determination based on federal priorities like climate change and sustainability: these are separate matters. The legislation should return to its bedrock procedural role: to gather information and inform the process, with clearly articulated timelines, participation limits to those truly affected, and extremely high barriers to post-approval delays and reversals.
The authors present four proposals to improve major project approval process in Canada:
- Ensure provincial and federal governments respect jurisdictional boundaries;
- Leave decision-making to expert tribunals best positioned to assess the public interest;
- Drafting legislation with precision that focuses review on matters relevant to the project being assessed; and
- Confirm the need to rely on the regulatory review process and the approvals granted for the purposes of the construction and operation of the project.
Charles DeLand, Associate Director, Research, C.D. Howe Institute; Brad Gilmour, Partner, Osler, Hoskin & Harcourt LLP; Laura Bouchard, Director of Communications, C.D. Howe Institute
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies.
